The business metric that really matters

by phil on Monday May 18, 2009 9:34 AM

One of my pet peeves in mainstream financial journalism is the obsession over large companies. While it's meaningful in a superficial sense (in that more power is now concentrated in one entity), it means jack-sh** for employees or our collective moral well-being. We don't need bigger companies. We need to focus on this instead:

(Link via Gruber.)

I also like this other article Gruber linked to: Nintendo Makes More Per Employee than Google, Goldman Sachs.

What's really sad, and proof that the Japanese workingman has his head in the sand, is the following:

Before tax and before pay, the average Goldman employee generated $1.24m in profit last year, based on the company's accounts. But after Nintendo upgraded its earnings forecast recently, the FT estimates each staff member will produce more than $1.6m in profit this year. ... While Nintendo employees are generating a ton of profit for their company, compensation for these workers pales in comparison to those who are employed by Goldman Sachs. The average salary at Nintendo was just $90,900, while Nintendo's big windfall goes to shareholders. Goldman Sachs employees earned about $660,000 in 2007 - which is roughly half the profit they generated.
That American compensation scheme is whack too, though.

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